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TMI Blog2017 (11) TMI 1501X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner, nor did it form part of the show cause notice. This fundamental flaw in the course adopted by the assessing authority could not have been cured by the liberty which was accorded by the Tribunal in terms of the order impugned. This additionally because the power to reassess was authorized by the Additional Commissioner in terms of the proviso to section 21. But for this permission, admittedly, the assessing authority had no jurisdiction to initiate or commence proceedings for reassessment. Revision allowed. - Sales/Trade Tax Revision No. 1747 of 2007 - - - Dated:- 24-11-2017 - Hon'ble Yashwant Varma, J. For the Applicant : Aloke Kumar For the Opposite Party : S. C. ORDER Heard learned counsel for the revisionist and the learned standing counsel. The instant revision calls in question an order dated 12 April 2007 in terms of which the Tribunal, while disposing of a batch of appeals preferred by the assessee as well as the Department, has made certain observations leaving it open to the assessing authority to redraw reassessment proceedings by issuance of a fresh notice. The order passed by the Tribunal primarily seeks to validate proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h before the first appellate authority as well as the Tribunal. Before this Court, the learned counsel has not raised any issue with respect to the reassessment insofar as Forms 31 are concerned. The objection which is taken is to the assessment with respect to SSF which as is contended never formed subject matter of the show cause notice. The Tribunal as noted above, has interfered with the order passed under Section 21 on the ground that the issue of SSF did not form part of the show cause which was issued to the assessee and therefore the ends of justice would merit the assessing authority being permitted to put the assessee to notice and thereafter proceed in the matter afresh. While ordinarily a permission or liberty to re draw proceedings may not be found fault with, the issue assumes significance in light of the nature of the power which the assessing authority was exercising in the facts of the present case. Admittedly, the assessing authority was exercising powers and jurisdiction conferred by Section 21 of the 1948 Act. Section 21, which confers a power of reassessment, empowers the assessing authority to proceed even after assessment has been undertaken when he has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of inglorious uncertainties but has been explained in various decisions to mean the assessing authority having reasonable ground or justification to know and suppose that income has escaped assessment. However in order to underline, the inherent limits on this power, the Court deems it apposite to refer to the reiteration of the law on the subject as appearing in a decision rendered by three learned Judges of the Supreme Court in State of U.P. Vs. Aryaverth Chawal Udyog2. Noticing the similarity in language and scope between section 21 of the 1948 Act and section 147 of the Income Tax Act, the Supreme Court observed:- 20. In context of Section 21 of the Act, the position of law was explained succinctly by this Court in CST v. Bhagwan Industries (P) Ltd. [CST v. Bhagwan Industries (P) Ltd., (1973) 3 SCC 265] as follows: (SCC pp. 271-72, paras 11-12) 11. The controversy between the parties has centred on the point as to whether assessing authority in the present case had reason to believe that any part of the turnover of the respondent had escaped assessment to tax for Assessment Year 1957-1958. Question in the circumstances arises as to what is the import of the words re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lier view taken in Phool Chand Bajrang Lal v. ITO [Phool Chand Bajrang Lal v. ITO, (1993) 4 SCC 77] , wherein, this Court, after a detailed analysis of the import of the words reason to believe in the phraseology of Section 147 of the IT Act, has observed thus: (Aslam Mohammad case [Aslam Mohammad Merchant v. Competent Authority, (2008) 14 SCC 186 : (2009) 2 SCC (Cri) 793] , SCC pp. 205-06, para 51) 51. ... ''25. From a combined review of the judgments of this Court, it follows that an Income Tax Officer acquires jurisdiction to reopen an assessment under Section 147(a) read with Section 148 of the Income Tax Act, 1961, only if on the basis of specific, reliable and relevant information coming to his possession subsequently, he has reasons, which he must record, to believe that, by reason of omission or failure on the part of the assessee to make a true and full disclosure of all material facts necessary for his assessment during the concluded assessment proceedings, any part of his income, profits or gains chargeable to income tax has escaped assessment. He may start reassessment proceedings either because some fresh facts come to light which were not previously di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loth and General Mills Co. Ltd. v. State of Rajasthan [Delhi Cloth and General Mills Co. Ltd. v. State of Rajasthan, (1980) 4 SCC 71 : 1980 SCC (Tax) 348] .) 29. The standard of reason exercised by the assessing authority is laid down as that of an honest and prudent person who would act on reasonable grounds and come to a cogent conclusion. The necessary sequitur is that a mere change of opinion while perusing the same material cannot be a reason to believe that a case of escaped assessment exists requiring assessment proceedings to be reopened. (See Binani Industries Ltd. v. CCT [Binani Industries Ltd.v. CCT, (2007) 15 SCC 435] ; A.L.A. Firm v. CIT [A.L.A. Firm v. CIT, (1991) 2 SCC 558] .) If a conscious application of mind is made to the relevant facts and material available or existing at the relevant point of time while making the assessment and again a different or divergent view is reached, it would tantamount to change of opinion . If an assessing authority forms an opinion during the original assessment proceedings on the basis of material facts and subsequently finds it to be erroneous; it is not a valid reason under the law for reassessment. Thus, reason to belie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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